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Table of contents
Abbreviations 7
Foreword
1. Introduction 10
2. Interplay of Lex Mercatoria, Conflict of laws and National law 11
3. "Good faith" and representations and warranties of the beneficiary 23
4. The instruments 25
4.1. The "mechanics" and the simple legal structure of the instruments 25
4.1.1. General 25
4.1.2. "Quasi-instruments" or Mezzanine instruments 27
4.1.3. On Conditions Precedent 29
4.2. Comfort letters 31
4.3. Bonds 34
4.4. Traditional guarantees and sureties 36
4.5. The function of bank guarantees 40
4.6. On demand guarantees 44
4.7. Letters of Credit 51
4.8. Confirmed letters of credit 57
4.9. The three main functions of commercial credits 62
4.10. The function of standby credit 65
4.11. "Blended" facilities 71
5. Reimbursement and introduction to Indemnity Agreements ("services
agreement") 73
5.1. Master Agreement 79
5.2. Conclusive evidence clause 81
5.3. Cash cover clause 81
5.4. Pari Passu 83
5.5. Pari Passu Covenant 83
5.6. Negative pledge 83
5.7. Duty to inform 84
5.8. Legal proceedings 85
5.9. Duty to give additional information and other duties 86
5.10. Representations and warranties (conditions precedents to agreement) 87
5.11. Default 87
6. Bank-to-bank Indemnity 89
7. The role of the underlying agreement and the balance 94
8. From banking practice: interviews 96
8.1. Pekka Heino, Nordea 96
8.2. Matti Vainionpaa, Sampo 97
8.3. Petri Ikavalko, Svenska Handelsbanken 97
8.4. Mirja Fonck, OKO Bank 98
9. Honour and the "moment of death" of the instrument 100
10. Strict compliance doctrine 107
11. The requirement of consistency 114
12. The liability of the banks 119
12.1. Bank's duty of care 125
12.2. Duty to whom and for what 132
12.3. Duty to notify and refusal 136
12.4. Reasonable time defined in UCC 140
12.5. Duty to put the documents at the disposal of the beneficiary 142
12.6. Duty of confidentiality 145
13. The "as tendered" or e contrario rule 149
14. Fraud ("abuse") or "fraus omnia corrumpit" 154
14.1. General 154
14.2. The sequence of events under fraud -rule 157
14.3. Duty (right) to refrain from paying 160
14.4. Fraud and good faith 162
14.5. Clear proof 164
14.6. Whose fraud is relevant? 168
14.7. Links and risks 172
14.8. Who bears the loss? 174
14.9. Concluding remarks and other observations 178
14.10. Nullity exception 182
14.11. Illegality 185
15. Doctrine of (substantive) independence (autonomy) 190
16. Interpretation 194
16.1. On interpretation 194
16.2. Multi-party understanding and interpretation? 200
16.3. The substantive independence should not lead to disregard of the "facility".
201
16.4. Interpretation of other instruments 211
16.5. Interpretation of applicable rules 214
17. Waiver doctrine: express and implied waivers 217
18. Conditions subsequent 227
18.1. General 227
18.2. "Evergreen clauses" and expiry clause 230
19. "Pay or extend" claims 235
20. Contractual patterns 237
21. Sample of use of credits and guarantees in a construction contract 242
22. Applicable Law 243
22.1. General 243
22.2. The place of performance v. "place of performer" 250
22.3. The Zeevi case and policy interests 255
22.4. English law 259
22.4.1. General 259
22.4.2. Offshore International S.A. v. Banco Central A.S. and Another 260
22.4.3. Power Curber International Ltd. v. National Bank of Kuwait S.A.K. 262
22.4.4. False conflict? 269
22.4.5. The Sonali case 271
22.4.6. Single law to a single "facility"? 277
22.4.7. Edward Owen Ltd. v. Barclays Bank 279
22.4.8. UCC 282
22.4.9. Burden of "education" 284
23. On jurisdiction 289
23.1. Forum non conveniens and forum shopping? 300
23.2. Forum connexitatis 307
23.3. Docdex proceedings 308
24. Amendments of the instrument 312
25. Transferability 315
25.1. No "bearer" rights 318
26. Assignability 320
27. Subrogation 324
27.1. General 324
27.2. UCC 327
27.3. The Niru case 328
28. Set-off 331
29. Security interest in the documents or goods 333
30. Disclaimers 338
31. What constitutes refusal? 349
32. Dishonour 356
33. Remedies - a substantive or procedural issue? 360
33.1. General 360
33.2. Damages 371
33.3. Dynamics Corporation of America v. The Citizens and Southern National
Bank and injunction 375
33.4. United Technologies Corporation v. Citibank N.A. and the availability of
injunction 378
33.5. Remedies under UCC 382
33.6. Equitable relief 385
33.7. Ex parte temporary restraining orders or other protective measures 387
33.8. Declaratory relief 389
33.9. Various types of injunctions 391
33.10. Unjust enrichment 394
34. Duty to mitigate and contributory negligence 398
35. What remains or may remain to be governed by national laws 401
36. De lege ferenda 409
List of references 411
Library of Congress Subject Headings for this publication:
Conflict of laws -- Letters of credit.